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HailDorothy writes "SCO's stock price is plummeting in the aftermath of Judge Kimball's ruling that Novell owns the UNIX copyrights, as we discussed earlier. '[W]e will continue to explore our options with respect to how we move forward from here,' SCO said in a public statement issued in a futile attempt to calm investors. SCO's stock price has fallen 70 percent during trading today, reaching a 52-week low. It looks like the end is near for SCO, which still owes Novell 95 percent of the SVRX UNIX royalties it collected from Microsoft and Sun through the SCOsource program. As Judge Kimbell noted in his ruling, it's unlikely that Novell will ever be able to collect on those royalties."

It really makes you wonder just how dumb some people are. Who throws money at a company making outrageous claims like that with out doing some homework to see if they even have a shred of proof to stand on?

I would be really interested to see how many people, besides people that work for SCO, invested more that $10,000 in their stock. If you're dumb enough to invest in SCO how did you make money in the first place?

Glad to see the SCO stooge go down, but we still face the great enemy of freedom, Microsoft. Freedom is about choice, and Microsoft is *ALL* about eliminating any real choice.

In one sense, I deny that it matters. Since I believe we are evolving towards more freedom, then the momentary ups and downs don't matter so much. Societies that have more freedom and democracy receive competitive advantages, and eventually they will prosper over the less free societies. However, it still saddens me greatly to observe Microsoft's fundamentally negative contributions to the long-term competitiveness of America. However, it makes me laugh to hear Gates complain about the slow rate of software evolution when his own Microsoft is the biggest single obstacle to *REAL* innovation and change.

However, at least the obstacle called SCO has been removed. Worth a bit of a celebration. This tool is used up.

The most surprising thing here to me is that this implies some share holders actually believed SCO had a case here.

Well, here's how it was explained to me:

SCO is so dirt-cheap right now that you can basically play with it without risk. At a dollar a share, you can buy a block of 100 shares and if it tanks you've lost a whopping $100. However, if by some miracle they actually managed to win, maybe that $100 would become a few thousand. Basically, it had a huge potential upside with almost no downside and a lot of people bought it just to see what might happen.

Well, that upside just vanished and the stock plummeted. You could also interpret this as meaning that 70% of SCO's market value was based on potential lottery winnings, and when the lottery date came and went without SCO winning, its price dropped to compensate.

You can still trade in state bonds issued by Czarist Russia. Should Russia ever claim legal succession of the Czarist times, they'd have to pay. You get them for a penny a billion or something like that. From time to time, it spikes sharply (to two pennies) whenever some Russian ruler ponders aloud that he might consider thinking about considering... you get the idea.

But that aside, it's quite likely that investors don't know jack about IT. How else do you want to explain dot.com? We all know (at least I hope that me and a few friends ain't the only ones) that this HAD TO collapse. It couldn't fly. I guess anyone with a background in BA and IT knew it. Just, those people are very, very rare and they usually used that knowledge for a quite legal get-quick-rich scheme, so they shut their mouth and cashed in.

They generally believe in large corporations. Usually this belief is justified. There is no chance in hell that Coke's ever going under. No matter what happens, no matter how bad the economy, no matter what crisis, no matter what war. Coke will survive it.

It's also likely that they didn't realize that pretty much the complete asset of SCO hangs on this suit. SCO is a pretty large company. Or was, at least, but it still has a name. Names and brands are quite powerful in the investment biz (mostly for the formentioned reason of survival). Virtually no large corps hang on just one single product.

Then there's the tendency of justice to know jack about IT either. So the chance to get a favorable verdict for SCO was actually not really zero. There have been other verdicts that contradict anything remotely touching common sense in the IT department recently.

This is what I think is the reason why investors even considered SCO stock. Yes, it was a risky paper, and at least many might have known. But they relied or believed (you might notice how often I use believe. Mostly because it has a bit of a religion) on assumptions based on recent events and developments. Not so much on reality or logic. Like I said, reality and logic had little to do with many judicial decisions in the IT biz lately.

No doubt some shareholders thought SCO might have a genuine case. Many more thought that IBM would pay or buy SCO just to get them out of way. Even more though that they might be able to buy their stock low and sell them to scavengers after the next SCO announcement/stock pump. For a lot of people it was a gamble: perhaps there was a perceived 20% chance of a payout/settlement with the chance of a better than 5:1 payback.

Nevermind; I figured it out. These are the folks who short-sold when the stock was $5. They figure they've made enough money and keeping the extra 50 cents isn't worth the odd possibility that something sends the stock north again. So, they're buying at 50 cents to cover the previous short and get out of the SCOX game entirely.

You'll notice they won't even tell you which patents of theirs linux infringes now. SCO got bad PR instead of them and IBM got good PR for defending linux.

No, they won't tell, and they most likely never will unless they get in a SCO-like situation where their actual revenue stream is drying up fast and it's either sue-and-pray or just die quietly.

I believe this is the primary lesson MS learned from their SCO experiment: The implication of IP infringement is much more effective at scaring people away from Linux than actually trying to prove it. As long as the infringement is a non-specific threat with only a hint of reality behind it, it works on the basic fear-centers of the brains of IT management. As soon as it becomes something real, like a lawsuit, then it instead it invites the managers to use the analytic portions of their brains. FUD and fact checking don't go together.

The concept of FUD is really nothing new to Microsoft of course, but this was an actual test run of "can we scare more people away from Linux with an actual IP lawsuit instead of just claiming that it is unsafe?" and it turns out the answer is "no".

First of all, we have probably years of the obligatory appeals to wade through. It ain't over yet!
Secondly, how long do you think it will be before SCO shares become the subject of pump-and-dump spam emails?

Come on- this is the one time you can actually buy enough stock to own a significan part of a corporation. Wityh about 24M shares at.44, you can buy 1% for a mere 100K. Think of the geek cred you can get by teaming up with 20 or 30 people, buying 51% of SCO and firing Darl. Open up whatever code they do own while you're at it. Hell I'd be in for.01%, just find 5K more people. Or wait a day or 2 and it'll probably be cheaper.

Remember SCO is still a company that does sell software and service contracts.

I have not analyzed SCO at all besides a quick look at this page, http://finance.yahoo.com/q/ks?s=SCOX [yahoo.com] but they did bring in ~27 million dollars in revenue last year, they apparently have ~8 million in cash on hand.

It was not that long ago that they were a player in the Unix market, and they probably have a significant number of customers who are locked in or happy with the SCO platform, even if not with its lawsuit happy CEO.

At a first glance, this stock looks attractive at 44 cents- Right now their market cap is about ~9.5 million. Before buying though, I would have to study what their debt load is (IE if their legal bills are already paid). If Darl stepped down and the company announced that it was going to go back to a business model of selling software, not suing people, I am pretty confident the stock would rise considerably.

The immediate problem is that, with this ruling, Novell stands to collect a lot of money from SCO... by some accounts, double their cash on hand. They effectively own SCO, and between them and IBM, will probably take the company, its products, and its cash during the bankruptcy proceedings. Darl will be given a tin cup with which to entice the residents of Salt Lake City to charity.

Ummm, yeah, that's the most moronic statement you could have possibly made. Talk about making outrageous claims without using your 2 brain cells (that may be a high estimate) to think through what you actually just said)

Just like SCO's claims were baseless, so would Novell's be, copyrights or no copyrights. Even if SCO were to have been found to own the copyrights, they would have lost. Both companies licensed any copyrighted Unix code contained in Linux under the GPL, and both have now done so for years (so neither company could argue it was an accidental limited release...both companies have based in the past (SCO) or are basing (Novell) their freakin businesses on Linux). Also, SCO was only ever able to demonstrate 300 lines of code, mostly header files and stuff that is in the public domain. And even if that stuff wasn't in the public domain, SCO and Novell entered into no less than 5 license agreements over said code with IBM and others that explicitly waived any rights to royalties and explicitly permit the redistribution of the code under ANY license. This was done through numerous standards bodies that both Novell and SCO took part in (such as the body that set Linux's ELF format as the standard binary format for all x86 Unixes). And last but not least, said code was also included in the ancient Unix release that Caldera released under the BSD license about a year before they became SCO, which Novell not only never objected to, but actually pointed to in court documents as a defense.

If you don't believe me, I'd be more than happy to find all of the documents and post links for you. Or, even better, go to Groklaw and read IBM's motion for Summary Judgment on its Declaratory Judgment of Non-infringement.

So yeah, your statement that the future of Linux rests with Novell seems pretty stupid now doesn't it? About all Novell would accomplish is ending up like SCO.

I can't see this working - it relies on nobody else being in the market. Imagine the shares are "worth" $1.00, but SCO wants the share price to be $1.50. SCO shill Alice puts her parcel of 1000 shares up for sale at $1.50, and then SCO shill Bob places an order to buy 1000 shares at market - but if random independent shareholder Carol has put her 1000 shares to sell at $1.30, the result is the shills buy 1000 over-priced shares instead of just transfering them. Until they've bought out all the people willing to sell for less than $1.50, they can't set that as the price.

Can anyone with more knowledge of sharemarkets criticize this analysis?

Looking to cash in on the 'ol dead cat bounce? Considering SCOX has always managed to bouce back over the $1 mark to avoid delisting I suspect you might be right. Not going to bet money on it though, this time even former cheerleaders like Daniel Lyons at Forbes say they are dead. Darl has a big ol fork sticking out of his forehead.

Yes they will file a desperate appeal with every court that might possibly have jurisdiction. No it isn't going to help them do anything other than drag this thing out to the end of the year, January at the best. Then it is over and the patent wars will move from saber rattling and into the shooting phase.

i know its a joke, but what do you do when novell and ibm come knocking on your door for that few million dollars SCO owes them? then everyone is out of their mere 100k and darl picks up a new cushy job as a CEO elsewhere.

You aren't going to get any insight mods on silly advice. SCOX has been below the threshold value for short trades for a long time.

Right now SCOX is so volatile the spammers can't even play their timing games with it. I actually expect them to suspend trading in the shares, probably before the market opens on Tuesday--and pending the bankruptcy filing. The question now is whether they can scrape up any basis for a Chapter 7 filing verses ol' Chapter 11.

Being unable to service that Novell licensing debt, makes it look like they were trading whilst insolvent, they could possibly 'bounce' from a civil to criminal court. Continuing to spend money on lawyers on a losing case whilst they cannot pay an outstanding debt to Novell puts them in more than just a tricky position.

The share trading that occurred during this whole process is likely to come under review in what is now starting to look like nothing more than a pump and dump scheme ie. sue IBM for billions with no hope of winning but have a sudden influx of funds to fund the case which just happens to come from one of IBM biggest competitors.